If I invest $20,000 in Westpac shares, how much passive income will I receive in 2027?

Westpac Banking Corp (ASX: WBC) shares have been an appealing source of sizeable dividend income over the last five years and 2027 is shaping up to be no different.

ASX bank shares tend to have a relatively generous dividend payout ratio and fairly low price/earnings (P/E) ratios. This combines to give banks fairly large dividend yields.

Westpac is one of the banks with a pleasing dividend yield. It's already such a large bank that investors aren't pricing in much growth in its valuation, which is one of the elements that gives Westpac a solid dividend yield.

With that in mind, let's take a look at how rewarding the dividend could be next year.

Projection for the Westpac dividend

Westpac hasn't announced its 2026 financial year results yet. However, analysts are currently projecting that the ASX bank share could slightly increase its payout by 1 cent per share to $1.54, according to Commsec.

Dividend growth is expected to continue into the 2027 financial year.

The projection for FY27 on Commsec suggests that the board of Westpac could decide to increase the payout again by another 1 cent per share to $1.55. In percentage terms, that would be a year-over-year increase of 0.6%.

At the time of writing, that forecast payout translates into a dividend yield of 4.4% excluding franking credits and 6.25% including franking credits.

That dividend is projected to come with a slight rise in Westpac's earnings in FY27 and implies a dividend payout ratio of 72%.

What would a $20,000 investment do?

At the time of writing, a $20,000 investment in Westpac shares would allow an Australian to buy 565 Westpac shares, with a bit of change left over.

With those 565 Westpac shares, a shareholder could receive $875.75 in dividend cash and $1,251 in grossed-up dividend income, including the franking credits. That's a sizeable amount of dividend income, and the ASX bank share's payments could continue to grow.

The bank reported that its net profit excluding notable items for the three months to June 2026 grew 2% compared to the FY26 first-half average.

Is this a good time to buy to invest in Westpac shares?

According to CMC Invest, the business has received eight broker ratings in the last three months. The average price target is $34, implying a possible decline of around 4% over the next year (at the time of writing).

Therefore, while it could provide solid dividends, there are plenty of ASX shares that could deliver better returns.

The post If I invest $20,000 in Westpac shares, how much passive income will I receive in 2027? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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